The absence of Regulation Boosts ICO but Restrains Blockchain Projects
The main barriers on popularizing blockchain technologies include non-regulation and scaling. The second problem is solved by the market members within separate technological projects. However, the grey zone may be toughly regulated by the state. It is caused by the inactivity of the Russian entrepreneurship in terms of legislative initiatives.
«Nowadays the forecast of developing the legislative regulation of ICO and blockchain solutions in Russia is very bad», declared Herman Klimenko, an advisor to the Russian President on the Internet at the International Blockchain Forum that took place on October 12, 2017 in Moscow. The IPI-Lab Company was an official partner of the event. The problem is that officials cannot ignore consistent information flows, and messages about ICOs and blockchain turned out to be a spate. Russian entrepreneurs have not provided any initiative yet unlike the commercial communities from other countries. «There are many discussions, but nobody makes any offers. The government cannot but ignore tendencies. That is why if business does not offer initiatives, the state will start tough regulation. Officials must get a request to start acting. Make your lawyers work, offer a bill», he called on entrepreneurs.
Herman Klimenko: If business has no initiatives, the state will start tough regulation.
Aleksander Shulgin, an investor of the BitFury project, agreed that the commercial sector must declare about its needs as quickly as possible, and then the regulator will meet these needs: «Take a guess and develop a bill. In general, if we speak about the judicial activity, has any blockchain entrepreneur patented his solution? Unfortunately, business stops at ICO».
Inactivity of the business community will inevitably cause prohibitions as maximum, and tough regulation as minimum.
Through the initiative of the IPI-Lab Company, it was offered to approve the resolution about methods to create a specialized regulatory environment. These are the key provisions:
To formalize the model of managing ICO (Initial Coin Offering) processes in the legislation by developing a draft law on collective investments as an alternative way of financing,
To create a zone for 5 years pilot testing of blockchain platforms under the control of the Central Bank of the Russian Federation.
From Technology to a New Type of Relations
According to the managing partner, a member of the IPI-Lab Research Council Ruben Pombuhchan, blockchain perfectly fits those economic laws that were formulated 30 years ago. That is why its wide use is inevitable. «The cheaper transactions are, the more efficient the process is. It goes not so much about financial mutual settlements as about fixing rights and any transactions, in general. Theoretically, their cost must tend to zero», the expert explains. «The distributed ledger (blockchain) technology by all means decreases transaction expenses of the market members».
Ruben Pombuhchan: Blockchain decreases any transaction expenses of business.
However, in spite of the obvious needs of the market «we still do not have an operating blockchain solution». This is how Herman Klimenko characterized the current situation. At the same time it is possible to regularly hear about the systems put into operation, for example, transferring state registers, registers of central banks to blockchain. «In fact, it goes about pilot projects. There are two reasons: lack of legislative base and scaling», noted Vladislav Martynov.
The theme of blockchain became slightly politicized.
Vladislav Martynov, a member of the Ethereum Surveillance Council, thinks that today’s main achievement is the understanding that blockchain technologies in Russia have a future. Yes, the regulation, rather than the prohibitive policy is in store. «1.5-2 years ago Russian developers regularly heard the thesis that the initiative was punished and business based on blockchain would rather move from the country because it causes imprisonment. Now the mood has totally changed. The theme is slightly politicized, there is competitiveness related to the frequency of mentioning blockchain».
Forecasting the Nearest Future
Every technology undergoes several development stages. Blockchain is not an exception. «Today the public understands the main use of blockchain in generating a cryptocurrency. However, to think so is the same as to assimilate email and the Internet. We started getting rid of illusions about ICOs but only begin to understand possibilities of blockchain», assures Vladislav Martynov.
Estimates from blockchain start-uppers: Today the ICO cost starts from USD 300 thous.
The ICO and blockchain projects segment is briskly growing. The majority of them state that they offer platforms developed individually, i.e. a new segment of distributed storage systems software is formed. However, looking at the history of developing any pool of technologies, we can see that in several years 2-3 key players go on working. «Success of blockchain projects will be confirmed by statistics that characterizes any venture market», agrees Oleg Ivanov, a founder of CryptoBazar Fund. «By the end of 2018 – early 2019 it is necessary to expect the segment stabilization, we will see key platform players».
Speaking about the sectoral use of blockchain, as the technologic segment stabilizes, the number of blockchain projects in the real sector of economy will actively grow. «Since the volume of business in the real sector is higher, a priori the number of blockchain projects in it will be higher than those in ICT», explains Oleg Ivanov. He thinks that now the market copies technologies.
Interest of large venture investors in ICO means that the segment starts recovering.
Now the absence of regulation allows easily attracting funds via ICOs without any obligations to investors, which explains a great number of «crypto placements». At the same time, according to representatives of blockchain startups that intend to carry out ICOs, it is necessary to spend at least USD 300 thous. to start this process. This is twice more expensive than last year. According to Aleksander Shulgin, the first sign that the ICO and blockchain sector recovers is the attention paid to projects by large venture investors. «It means that we will get rid of many failing ICOs, and the community will start developing», he resumed. «From now on make more serious preparations for ICOs».